Selling a leasehold property
Most buyers need a mortgage, and lenders apply strict criteria to lease term (often more than 80 years at completion and/or a set buffer beyond the mortgage term), ground‑rent structures (no doubling/aggressive reviews; peppercorn expected on post‑2022 new “regulated” long leases), and building‑safety documentation where relevant (for example, EWS1/fire‑risk reports).
For flats, a statutory lease extension under the Leasehold Reform, Housing and Urban Development Act 1993 adds 90 years and reduces ground rent to a peppercorn for the extended term; valuation follows statutory assumptions and can include marriage value if the unexpired term is 80 years or less at the valuation date. Headline reforms in the Leasehold and Freehold Reform Act 2024 (such as 990‑year extensions and abolition of marriage value) are not yet fully in force and remain subject to commencement.
If you are looking to extend your lease before selling, our Lease Extension blogs provide detailed guidance explaining the process, costs, and timelines involved in lease extensions. You can also use our Lease Extension Calculator to get an idea of what a leasehold extension may cost you.
What is a “short lease” and why it matters
There is no single statutory definition of a “short lease,” but in practice it means a lease with an unexpired term that creates lending and valuation problems. Two thresholds matter most:
(1) around 80 years, because once the unexpired term is 80 years or less at the statutory valuation date, “marriage value” is generally brought into the statutory premium for a lease extension (significantly increasing the cost); and
(2) lender policy thresholds, because many mainstream lenders require more than 80 years unexpired at completion and/or a minimum buffer beyond the mortgage term (for example, mortgage term + 30 years). As the term shortens, the flat’s value typically reduces non‑linearly and its mortgageability narrows, which can depress achievable sale price unless the lease is extended or the buyer’s price is adjusted to reflect extension costs.
If you are planning a sale and your lease is approaching 80 years, it is often economically sensible to address the lease term before marketing (or to price the property to reflect the buyer’s likely statutory extension premium and “reasonable” costs). Our team can model both routes (pre‑sale extension vs price‑adjusted sale) with input from specialist valuers and your agent so you can choose the option that best protects value and timetable.
Statutory Lease Extensions and the 1993 Act
For many leaseholders, extending the lease can significantly improve the property’s marketability before sale.
Under the Leasehold Reform, Housing and Urban Development Act 1993, most qualifying leaseholders of flats have the statutory right to extend their lease. A successful statutory extension will:
- Add 90 years to the existing lease term; and
- Reduce the ground rent to a peppercorn (effectively zero) for the extended term.
The premium payable for the extension is calculated using statutory valuation principles and can include marriage value if the lease term has already fallen to 80 years or less.
The Leasehold and Freehold Reform Act 2024 introduces headline reforms to the leasehold system, including proposals for 990-year lease extensions and the abolition of marriage value. However, these provisions are not yet fully in force and remain subject to commencement, meaning the current statutory framework continues to apply in most cases.
Given the complexity of lease-extension valuation and legal procedures, obtaining professional legal advice at an early stage can help leaseholders understand their rights, likely costs, and the most suitable strategy for their sale. Need an estimate before starting the process, our Lease Extension Calculator provides a useful starting point for estimating the potential premium and understanding how lease length affects cost.
If you are planning to sell a flat with a short lease, there are several possible approaches. The most appropriate option will depend on the remaining lease term, the likely extension premium, and the seller’s preferred timescale.
Extending the Lease Before Marketing
One option is to complete a statutory lease extension before placing the property on the market. This can increase the number of potential buyers and may improve the sale price by removing concerns about the lease term.
Although this approach involves paying the extension premium in advance, it can provide certainty for buyers and mortgage lenders and may lead to a smoother transaction.
- Starting the Statutory Extension Process Before Sale
Where a seller qualifies under the 1993 Act, it may also be possible to serve the statutory Section 42 notice and assign the benefit of that notice to the buyer on completion. This allows the buyer to continue the lease extension process after purchasing the property without waiting to satisfy the usual ownership period.
This approach can be particularly useful where a seller wishes to proceed with the sale but still provide comfort to a buyer and their lender that the lease extension process is already underway.
- Adjusting the Sale Price
Another common approach is to adjust the sale price to reflect the buyer’s likely lease extension costs.
In this situation, the buyer will usually arrange the lease extension themselves after completion. The agreed sale price typically reflects the anticipated extension premium together with the “reasonable” professional costs payable to the freeholder under the statutory process.
Accurate valuation advice is essential when taking this route to ensure the price reduction reflects the true cost of the extension.
- Informal Lease Extensions
In some cases, the freeholder may agree to an informal lease extension outside the statutory framework. While this can sometimes be quicker, it is important to carefully review the terms of the proposed lease to ensure it does not introduce problematic clauses, particularly in relation to ground rent or future rent review provisions.
A poorly structured informal extension can sometimes create future mortgageability issues. For this reason, obtaining independent legal advice before agreeing to an informal extension is strongly recommended, and at Starck Uberoi Solicitors we are able to provide Independent Legal Advice (ILA) where required, ensuring that clients fully understand the legal and financial implications of the proposed lease terms before proceeding.
How can I sell my unmortgageable property?
If the above solutions aren’t possible or your property is remains hard to mortgage for a different reason, don’t give up hope just yet. Selling mortgage‑constrained property may not be easy, but it’s possible. Buyers hoping to purchase an unmortgageable property often take out bridging loans in order to purchase unmortgageable property, fix the issues that make it unmortgageable (if possible), then arrange a proper mortgage for the property to repay the bridging loan. Bridging loan lenders tend to be more willing to take on unmortgageable property as security and come with an exit strategy in place, so the borrower is much less likely to default on the loan.
Find out more in our blog post on bridging loan conveyancing.
Although it’ll take longer, you can always wait to find a cash buyer who will buy your property for a lower price without a mortgage. If you’re struggling to find a buyer, you could sell your property through an estate agent who specialises in selling unmortgageable property. There will be a commission fee for their services, but they may be able to find a suitable buyer quicker. You could also try to sell your property at auction.
Many auctions require the buyer to have the deposit for a property available on the day of the auction, so most auction buyers will have their finances in order to buy the property by the auction date. This means that any buyers bidding on your property will usually be able to purchase the property in its current state regardless of its mortgageability. Read our blog post on Auction Property Conveyancing to find out more about how property auctions work. We will prepare a lender‑ready legal pack (LPE1, building‑safety documentation, title/lease remedies) or, for auction, a transparent special‑conditions strategy that protects value and timeline.
How Starck Uberoi can help
With Starck Uberoi, selling unmortgageable property doesn’t have to be a headache. Our property solicitors are incredibly knowledgeable in all areas of property law and can help you understand why your property could be unmortgageable and what you can do to fix it. Once the problem has been solved, our Law-Society Accredited conveyancers can handle the sale efficiently for you. We are on major lender panels, use secure digital onboarding (ID/AML, e‑signatures), and provide timely milestone updates so you always know what’s next. To book an appointment, please call 020 8840 6640 or email solicitor@starckuberoi.co.uk.
Our Offices
Our Brentford Solicitors, are located on the High Street in a grand three-story building, just a short distance from Brentford County Court. Our Belgravia solicitors are located Just a 5-minute walk from Victoria tube station in Grosvenor Gardens. Our Ealing solicitors are only a short walk from both Ealing Broadway and South Ealing and our Richmond Solicitors have the pleasure of overlooking the picturesque Richmond Green. Finally, our Solicitors in Canterbury are located in the within the UNESCO World Heritage Site of Canterbury Cathedral. Our partner, Raminder Uberoi, can also offer a Notary Public Service at any of our London offices.
